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Economist says VN should have only 3 petrol and oil distributors
While many experts have called on the Government to allow more enterprises to join the petrol and oil market, Dr. Nguyen Quang A believes that less is more.
A said that there are now 11 petrol and oil importers in Vietnam – too many, according to him. In order to make the market healthier and more competitive, it is necessary to restructure the petrol and oil trade and bankrupt or merge some of the importers.
What do you mean by ‘restructuring petrol and oil trade’?
Like telecommunications, the petrol and oil market should have three or four key petrol importers, each holding some 30 percent of the market, I mean that no enterprise should control the market. This would ensure real competition among distributors.
I think that we should not raise the number of petrol and oil importers and distributors. The state just needs to control the quality of petrol and oil products, while it should not intervene in the pricing scheme. The only function of the state is to keep a watch over the enterprises’ operations to find out if the enterprises are following the laws and competing with each other in a healthy way.
You have said that 11 enterprises are too many enterprises in the market and that there should be three or four enterprises only. Do you mean that some seven enterprises need to be dissolved?
We should think of this, especially when we have the bankruptcy law, and leaders of the Ministry of Industry and Trade said that after two years of implementing the new scheme on petrol and oil pricing management, enterprises are still incurring losses. We could also think of merging these enterprises.
We should not apply the merger and acquisition (M&A) scheme with Petrolimex (which is now holding 60 percent of the market share – reporter). As for the other ten enterprises, the state can use policies on tax incentives and exchange rates to encourage them to merge.
Of course, we couldnot fulfill the merger and acquisition deals in a month; it would take four or five years. But real competition would take shape in the market.
Is there any other option? I mean, could we maintain the 11 operational enterprises and apply necessary measures to have healthy competition?
If we keep the 11 existing enterprises, each of them should hold the same market share, some 10 percent. We should not let any enterprise hold 60 percent of the market share, the thing that Petrolimex is doing.
If the market share of the enterprises is the same (9 or 10 percent), there will be stiff competition among them. The state needs to create favourable conditions for small enterprises to improve their market shares, while the big guys will have to lower their market shares.
Deputy Minister of Finance Nguyen Cong Nghiep on August 5 said that the ministry has not made a final decision on whether to allow petrol distributors to raise petrol prices by 500 dong per litre as proposed by petrol distributors.
Explaining this, the Deputy Minister said that petrol and oil prices in the world’s market now are fluctuating in a complicated way. Moreover, it is now really not a good time to adjust petrol prices.
According to Vuong Dinh Dung, Director of the Military Petrol and oil Corporation, the petrol price increased by 11.57 percent in the period from July 24 to August 4, while mazut price surged by 7.23 percent. A92 petrol is now retailing at 14,200 dong per litre.
vietnamnet, vtc
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